Why Do People Hate NAFTA?

Once again, economic nationalism is all the rage during an election cycle. Barack Obama and Hillary Clinton seem to have devoted much of the last week vociferously denouncing NAFTA and free trade in general. However, the true question is whether either of them actually believe what they are saying. For example, our friend Jimmy P. at U.S. News highlights a quote on globalization from Obama’s book:

We can try to slow globalization, but we can’t stop it. The U.S. economy is now so integrated with the rest of the world, and digital commerce so widespread, that it’s hard to imagine, much less enforce, an effective regime of protectionism. A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every U.S. manufacturer who uses steel in its products less competitive on the world market…. U.S. Border Patrol agents can’t interdict the services of a call center in India, or stop an electrical engineer in Prague from sending his work via email to a company in Dubuque. When it comes to trade, there are few borders left.

That hardly sounds like his rhetoric from the last several weeks. So either Obama doesn’t believe what he wrote or he doesn’t believe what he is saying. I think that it is the latter. He knows that by winning Ohio next week, he inches closer to pushing Hillary Clinton to the status of an also-ran and thus he is pandering to the economic unease of Ohioans. Additionally, economists of all stripes seem to agree that NAFTA is not the cause of Ohio’s economic woes (see, for example, Angry Bear and Mark Thoma) and there is no doubt that this group includes Obama’s economic advisor Austan Goolsbee.Meanwhile Steve Chapman highlights the myths about NAFTA:

What everyone forgets is that we got the best of that bargain, since our tariffs were very low to begin with.”Mexico had very good access to the U.S. market” already, says Charlene Barshefsky, who was U.S. Trade Representative in the Clinton administration. “What NAFTA did was level the playing field.” Critics complain that while exports to Mexico have risen, imports from Mexico have risen even faster.But that’s not because we embraced free trade. It’s because our economy has been more robust than theirs. Prosperous consumers buy more goods, from both home and abroad, than struggling consumers. Absent NAFTA, the trade imbalance with Mexico would not be smaller. It would be bigger.

Let’s hope that a President Obama’s views on trade would be more like those from his book and less like those in his recent speeches.

7 responses to “Why Do People Hate NAFTA?

  1. You’re blindly missing or ignoring the fact that NAFTA encouraged a number of US manufacturers to move their operations to Mexico. That cost a lot of Americans their jobs.

    NAFTA needs to be abolished or renegotiated in order to protect US jobs. NAFTA also needs to abolished or renegotiated to stop the cruel exploitation of Mexicans at the maquiladoras.

  2. The maquiladoras weren’t created by NAFTA, they were there before that. The Mexican government let raw materials and parts in duty-free as long the goods they created were sent back out. That way they got people working, increasing tax revenues.

    Actually the maquiladoras have taken huge hits but not from NAFTA but from cheaper Chinese labor.

  3. True, maquiladoras pre-date NAFTA, but you can’t tell me they haven’t expanded – even if other different official names – within the “Green Zones” set forth as part of NAFTA.

  4. A healthy Mexico economically, is good against the type of socialism that presents a whole new set of problems. Venezuela has a plague which might spread northward if there is sufficient fuel to carry it.

    A few years is not enough time for the consumer side in Mexico to pick up to our levels yet. And Yes the Chinese could be the issue here OR there, as even our declining currency is as good as gold to them.. (though recent news from mainland is hinting towards higher production costs limiting output in the near future)

  5. China is beyond me insofar as what their economic impact is on Mexico. It’s production happening elsewhere, so probably a negative, but China prefers the lower of tariffs at Mexicans ports since – due to NAFTA – they can still each the US at very competitive rates.

  6. I think nafta will eventually bleed Canada and USA of a maximum number of manufacturing jobs if we cannot reverse it. It will not create new jobs in the quality and quantity needed to replace all the lost quality jobs. I am in no way for a north american union, full economic integration or military integration.
    I love my country and its autonomy.

  7. Bwahahaha Jason Gillman is stupid. Hey the 1950’s called they want you back. Red scare my buttuski eh comrad.

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